International Journal of Management and Enterprise Development (13 papers in press)
Early Stages of Service Business Review and Synthesis
by Matti Muhos, Martti Saarela, Anna-Mari Simunaniemi, Del Foit Jr., Lada Rasochova
Abstract: Many stage models have been introduced to clarify management priorities during the early stages of business growth. However, many of these models are conceptual and universal, providing only limited benefits to specific industries and business contexts. The early stages of technology-based ventures have attracted interest, while little attention has been paid to the early stages of service-based firms. This study examines the early stages of growth in service-based firms. The following research questions are posed: What are the basic characteristics of recent empirical studies on the early stages of service-based firms? What are the themes and sequential patterns in the early stages of service-based firms as revealed in the recent empirical literature? This study provides a meta-analytical review designed to answer the research questions. A group of recent empirical stage models of the early stages of service-based business was selected for meta-analysis and synthesis. The meta-analysis integrates the findings of these models and introduces a self-evaluation framework for the early stages of service-based companies.
Keywords: enterprise development; growth management; stages of growth; growth process; service-based firm; business development; meta-analysis; review.
Heuristics of the Internationalisation of SMEs: A Grounded Theory Method
by Hossein Khorrami, Mohammad Zarei, Behrouz Zarei
Abstract: Heuristics can be a useful and applicable tool, utilised in simplified strategies for solving ill-structured and highly uncertain problems, such as internationalisation of Small-and Medium-Sized Enterprises (SMEs). International Entrepreneurship (IE) researches suggest that, paying more attention to discovering the valuable individual initiatives used in internationalisation of SMEs. This paper investigates the Iranian internationalised SMEs to provide a set of heuristic principles and guidelines for running a successful internationalisation process. Analyses of the interview data suggest that, heuristics is an instructional tool of internationalisation, which facilitates and subsequently accelerates the process of SMEs internationalisation. The model of internationalisation based on heuristics is extracted from the systematic grounded theory (GT). Originally, GT was applied for increasing the chance of discovering the unanticipated happenings as an inductive theory-discovering methodology. From the research, it can be concluded that by applying the heuristics-based model of internationalisation, SMEs can make significant contributions in IE such as position stability in foreign markets, problem-solving tools in internationalisation process, sales growth, profitability, as well as added value generation.
Keywords: Internationalisation; Heuristic principle; Grounded theory; International entrepreneurship; Small-and Medium-Sized Enterprises (SMEs)
Analysing innovation-driven enterprises stakeholders in two spatial ICT ecosystems
by Jukka Majava, Tuomo Kinnunen, Del Foit, Pekka Kess
Abstract: Innovation-driven enterprises (IDEs) engage with various stakeholders during new product development and commercialisation. Spatial ecosystems in which these enterprises operate provide them with the local business environment for new innovation development. Our study analyses IDEs stakeholders in two spatial information and communication technology (ICT) business ecosystems: one in San Diego, California, USA and the other in Oulu, Finland. The study analyses the stakeholders presence and their roles to support innovation. The critical stakeholders for supporting innovation-driven enterprises, such as providers of different forms of capital and research institutes, are identified. Our findings suggest that IDEs should exploit the spatial ecosystems by interacting with various stakeholders and by gaining access to local resources to create new innovations. The results of the study are beneficial both for managers of new innovation-driven ventures and decision-makers designing and implementing innovation policies.
Keywords: innovation; business ecosystem; stakeholder; innovation-driven enterprise (IDE); spatial context; information and communication technology (ICT)
Raising Entrepreneurs: Can Parenting Style Amplify Entrepreneurial Intentions and Behavior?
by David Jiang, Scott Hayward, M. Lane Morris
Abstract: Over a decade ago, Aldrich and Cliff (2003) argued that researchers have unnaturally separated the social institutions of family and business, calling for more exploration of the pervasive effects of family on entrepreneurship. Recent research has started to explore these effects within a family business context but scholars still do not know much about how other family environments influence entrepreneurship. Using a family systems theoretical perspective, this conceptual paper addresses how developmental aspects of parenting and family environments, both inside and outside a family business context, contribute to the expression of entrepreneurial intentions and behaviors in adulthood. The most theoretically novel aspects of this paper focus on how family business contexts amplify links between entrepreneurial intentions and behaviors.
Keywords: entrepreneurial intention; parenting style; family business; family systems; entrepreneurship; authoritative; authoritarian; attachment style.
Business model research using an evolutionary theory perspective
by David L. Brannon, Verona P. Edmond
Abstract: The authors propose evolutionary theory as an overarching tool to better understand the business model concept. Academics have approached the business model concept as a means to explain value creation. However, progress on the concept has been slow due to disparate views and definitions. The authors explain how evolutionary theory provides a comprehensive theoretical basis to examine business models, especially for innovation. This includes theoretically guided origins of innovation. Configuration analysis is suggested for empirical examination of this complex concept. Evolutionary theory has the potential to bridge the different views of the business model.
Keywords: business model innovation; business models; configuration theory; entrepreneurship; evolutionary theory; innovation; organisational routines.
Success factors for active internationalisation of small and medium-sized software enterprises: case analyses from France and Brazil
by Maurício Floriano Galimberti, Raul Sidnei Wazlawick
Abstract: In many countries, there is a small but growing tendency towards the internationalisation of small and medium-sized software enterprises. This paper searches for insights about the internationalisation process of small and medium-sized enterprises (SMEs) with highly innovative products. It compares the internationalisation process in France, as a mainstream country in terms of technology, and Brazil, as a non-mainstream one. This paper attempts to answer the following questions: what are the factors that enable SMEs to offer high value-added products to the foreign market, and what are the differences and similarities between internationalisation processes from both countries. Based on a multiple case study, this research shows that although innovation, entrepreneurship, and foreign market knowledge are important dimensions for the active internationalisation, networking is not as relevant as it was believed to be. Moreover, the study shows that internationalisation consists of two different processes.
Keywords: active internationalisation; software innovation; software SMEs; success factors; small and medium-sized enterprises; France; Brazil; software development; value-added products; foreign markets; entrepreneurship; market knowledge; networking.
Financial failure of a startup: a simulation approach
by Erkki K. Laitinen
Abstract: The objective is to develop a simulation model of a startup to assess the ceteris paribus effects of (16) different parameters on the likelihood of financial failure. The deterministic growth path is described by a second-order Pascal distribution. Uncertainty is incorporated assuming a random variable proportional to sales. Three criteria for financial failure are developed to assess the likelihood of different failure types (profitability, solidity, and liquidity failures). Finnish data from 9,066 non-failed and 118 failed startups are used to approximate the value range of the parameters in non-failed and different types of failed startups. For each parameter, effects are analysed for 25 different values based on 1,000 simulation rounds each. The findings strongly emphasise the central role of internal rate of return in the likelihood of each type of failure. They also emphasise importance of early generation of sales for the likelihood of profitability failure and the strong effect of fixed expenses, size of initial investment, and initial equity capital on failure likelihood.
Keywords: bankruptcy; failure probability; financial failure; liquidity crisis; profitability; simulation; startups; startup failures; uncertainty; Finland; internal rate of return; sales generation; fixed expenses; initial investment; initial equity capital.
The role of non-economic goals in facilitating financial performance in family and non-family firms: a moderated mediation model
by Bart J. Debicki, Robert Van De Graaff Randolph, Robert Zajkowski
Abstract: The relevance of non-economic goals has long been recognised as significant in understanding the idiosyncratic behaviours and strategies of family firms. However, non-economic goals are not unique to family firms and are becoming an increasingly common part of the strategic landscape of organisations. We develop arguments, nested in behavioural and emotional agency, that suggest that non-economic goal salience may play a facilitating role in the relationship between the importance of economic goals and financial performance and that the presence of shared family ties among the ownership of firms moderates this mediated relationship. Our findings contribute to the current understanding of non-economic goals in terms of their impact on the financial performance of organisations as well as provide initial arguments for clarifying the presence of such goals as commonly associated with family firms but not uniquely derived within them.
Keywords: behavioural agency; emotional agency; family firms; economic goals; non-economic goals; non-family firms; firm performance; family businesses; financial performance; moderated mediation; family ties.
Impact of exploitative learning strategy on Malaysian SMEs' creativity and innovation capabilities
by Naser Valaei, Sajad Rezaei, Maryam Emami
Abstract: Small and medium-sized enterprises (SMEs) can be considered as learning enterprises due to their competitive natures. The aim of the present study is to examine the notion of exploitative learning strategy, which is practised among Malaysian SMEs to determine to which extent it will result in creativity and innovation. A questionnaire was developed and was distributed among 1,850 SMEs online from which 206 surveys were thoroughly completed and returned. A variance-based structural equation modelling technique (VB-SEM) was utilised to assess the measurement as well as the structural relationships for exogenous and endogenous constructs. Results of hypothesis testing indicate that the exploitative learning strategy has a significant, positive role in improvisational creativity, compositional creativity and innovation while its indirect effect on innovation capability is also significant through compositional creativity. This study also finds that the number of employees moderates the relationship between exploitative learning strategy, improvisational creativity and innovation in SMEs.
Keywords: compositional creativity; exploitative learning strategy; improvisational creativity; Malaysia; SMEs; small and medium-sized enterprises; innovation capability; structural equation modelling; SEM.
Special Issue on: Behavioural Issues in Family Enterprises
PSYCHOLOGICAL CONTRACT AND SOCIAL EXCHANGE IN FAMILY FIRMS
by Timothy Madden, Laura Madden, Jason Strickling, Kimberly Eddleston
Abstract: This study tests a social exchange theory model that links firm family members transactional and relational psychological contract obligations to firm performance. Evidence supports the hypotheses that organizational obligations are antecedents of individual contributions to firm performance in the psychological contract model. When family firms meet the employees perceived obligations to their employees, the employees meet their perceived obligations to their employers. Participative decision making and succession planning are of particular importance to maintain transgenerational control and evidence is found to support succession planning as fully mediating the relationship between participative decision making and firm performance.
Keywords: social exchange theory; psychological contract; family firms; participative decision making; succession.
Success Factors of Polish Family Businesses
by Krystyna Kołodko, Elżbieta Weiss, Agnieszka Bitkowska, Sabina Knauf, Krystyna Leszczewska
Abstract: This article presents the results of a study carried out among family businesses operating in Poland. It is intended to supplement previously generated knowledge in the area of the operation of family businesses in the specific socio-economic and legal conditions in Poland. The objective was to collate the opinions of entrepreneurs regarding the need for visibility of the family and the family business status in business relations and the marketing activities of enterprises. The data was collected using in-depth interviews with the Polish family business owners. This paper outlines the conclusions of the study with respect to success factors such as: the trust among the family members, flexibility and adaptability to changing market conditions or the ability to act flexibly and quickly, adapt to changes in the environment and success-hindering factors for Polish family firms such as: the financial challenges borne by employers like taxes and social security costs or the instability of the law.
Keywords: Polish family firms; success factors; success-hindering factors.
TIME TO RECALIBRATE? EXPLORING ENTREPRENEURIAL ORIENTATION OF FAMILY BUSINESSES BEFORE, DURING, AND AFTER AN ENVIRONMENTAL JOLT
by G. Tyge Payne, Curt Moore, Jennifer Sexton
Abstract: Entrepreneurial orientation (EO) has become a construct of considerable interest in the family business literature. Despite such attention, scholars have yet to examine if and how EO in family businesses changes over time. This study explores this gap by investigating both continuous and discontinuous change in EO in a sample of S&P 500 family businesses between 2001 and 2012. We find that EO changes before, during, and after an environmental jolt, which is defined as a major unforeseen and discontinuous environmental change. More specifically, we find that EO gradually increases at a linear rate prior to the occurrence of a jolt, discontinuously decreases during the initial stage of the jolt, then resumes a gradual linear growth trend following this period. We further explore the relationship between time and EO by examining change in EO across different industries, finding significant changes between family firms in different industries.
Keywords: Family Business; Entrepreneurial Orientation; Temporality; Time; Crisis; Discontinuous Change
Internationalization of Publicly Traded Family Firms: A Transaction Cost Theory Perspective and Longitudinal Analysis
by Esra Memili, Kaustav Misra, James Chrisman, Dianne Welsh
Abstract: There has been a prominent stream of research investigating internationalization of organizations. While the importance of transaction costs in the governance decisions of firms has been well established in the literature, transaction cost theory (TCT) in family firms remains under utilized. We examine the impact of family governance (i.e., family ownership and familys involvement in management and board) on internationalization within the domain of TCT on 386 of S&P 500 firms. Our findings indicate an inverted U-shaped relationship between family ownership and internationalization and a u-shaped relationship between familys involvement in management and board and internationalization. This illustrates the interesting differential impact of family involvement components on internationalization. We conclude by discussing future research and implications for practice.
Keywords: Transaction Cost Theory; Internationalization; Family Firms; Family Ownership; Family Management